Wonkbook: Democrats want entitlements, taxes, and subsidies on the table

By
Ezra Klein

I was wondering when this would finally happen: "Senate Democratic leaders, seeking to break an impasse over Republican-backed spending cuts, on Tuesday proposed broadening the scope of budget negotiations into more politically volatile terrain that includes taxes, subsidies and entitlement programs." It's about time. There's not much money to begin with in non-security discretionary spending, and because it's such a popular place to search for cuts, there's not much waste, either. It's like trying to clean your house by doing more and more to organize the hallway closet. It might help the first few times, but eventually, you have to head elsewhere.

We're not going to find any real answers to our budget woes by cutting discretionary spending. That's not where the problem is. Entitlements, tax expenditures and rates, and even defense spending make more sense for a deficit-reduction deal. Moreover, if we're looking for deficit reduction, it makes sense to prioritize policies that work over many years, rather than just one year: a bill that saves $100 billion over the next five years is better for the deficit than a bill that saves $60 billion over the next fives months -- and it'll do less damage to a shaky recovery.

But because a more comprehensive deal might include tax increases, Republicans are resisting this broader conversation. "Right now we need to crawl before we can walk, and that means finishing last year's business and complete a spending bill," said Michael Steel, a spokesman for House Speaker John Boehner. "[The Democrats] answer is to raise taxes, not to cut spending, and that's not something anyone else is talking about," said Don Stewart, a spokesman for Senate Republican Leader Mitch McConnell (and as you'll see in the Bloomberg poll below, that's not quite true: the American people seem to quite like the idea of deficit reduction through taxes on the wealthy). And if you read down in Wonkbook, you'll see a Politico piece on Grover Norquist taking aim at Tom Coburn for considering revenue as part of a tax deal. Tom Coburn!

This might prove a clarifying moment. If Republicans are only willing to consider cuts to non-defense discretionary spending as part of a deficit-reduction deal, then whatever their aim is, it's not really deficit reduction. That's not how you reduce the deficit. If they're only willing to consider deep cuts to this year, as opposed to policies that would save a larger amount of money over the next few years, then it'll raise the possibility that they're motivated more by the specifics of an unwise campaign promise than by concern over the budget. Either "we're broke" or we're not. But if the answer is that we are -- and that's certainly what John Boehner has said in the past -- then it's time we started acting like it. The idea that you can balance the budget simply by doing things liberals don't like and Americans don't notice is a campaign fiction, not a plausible fiscal philosophy.

Top Stories

The Senate will stage votes on the GOP and Democratic budget proposals today, report Paul Kane and Felicia Sonmez: "Senate leaders delayed until Wednesday consideration of a bill to fund the government through Sept. 30, as Democrats accused Republicans of reneging on an agreement to stage side-by-side votes on two competing plans to cut spending. Senate Majority Leader Harry M. Reid (D-Nev.) charged that GOP senators were afraid to vote on a House proposal to cut $61 billion from domestic agencies over the next six months, a bill Reid derided as the 'tea party plan.'...With a March 18 deadline looming, the White House and Senate Democrats have offered a plan to cut less than $5 billion from domestic agencies through the remainder of the fiscal year, a proposal that even some moderate Democrats have criticized as insufficient in light of record budget deficits."

Senate Democrats want to open up discussions on tax and entitlement reform, reports Janet Hook: "Senate Democratic leaders, seeking to break an impasse over Republican-backed spending cuts, on Tuesday proposed broadening the scope of budget negotiations into more politically volatile terrain that includes taxes, subsidies and entitlement programs. Senate Majority Leader Harry Reid (D., Nev.) said that efforts to bridge the parties' $50 billion difference in proposed budget cuts for the remainder of fiscal-year 2011 could reach beyond domestic discretionary spending and move into tax policy and programs such as farm subsidies...Sen. Charles Schumer (D., N.Y.) is expected to echo that suggestion in a speech Wednesday and argue that tens of billions of dollars of deficit-reduction measures could be found if budget talks are broadened."

Grover Norquist is targeting Republican Senators working on a debt deal, reports Carrie Budoff Brown: "Coburn and Norquist, two of Washington’s most unfailing apostles of starving the government, are locked in a low-grade duel over whether ideological purity on taxes is a realistic position in the face of skyrocketing national debt and growing deficits. Norquist says it’s simple: No new taxes means no new taxes. Under no circumstances should Congress raise new revenues to solve the problem, he says. Coburn usually would agree. But when it comes to taming the $14 trillion debt — a challenge Coburn has called 'a matter of national survival' — he won’t rule it out...The differences, detailed in an unusual series of letters last month and in interviews with POLITICO, offered the first flicker of what is already a burgeoning debate on the right over the role of taxes in any comprehensive effort to reduce the deficit.

A new Bloomberg poll shows Americans want deficit reduction, bipartisan compromise, and few serious spending cuts: "Almost 8 in 10 people say Republicans and Democrats should reach a compromise on a plan to reduce the federal budget deficit to keep the government running, a Bloomberg National Poll shows. At the same time, lopsided margins oppose cuts to Medicare, education, environmental protection, medical research and community-renewal programs. While Americans say it’s important to improve the government’s fiscal situation, among the few deficit-reducing moves they back are cutting foreign aid, pulling U.S. troops out of Afghanistan and Iraq, and repealing the Bush-era tax cuts for households earning more than $250,000 a year."

The White House is trying to mend its relationship with the Cabinet, reports Anne Kornblut: "News this week of the first departure of a Cabinet secretary from the Obama administration comes amid a wide-ranging effort under the new chief of staff, William M. Daley, to repair badly frayed relations between the White House and the Cabinet. During the first two years of President Obama's term, the administration fully embraced just a few of his superstar picks - people such as Defense Secretary Robert M. Gates and Education Secretary Arne Duncan. But many more agency chiefs conducted their business in relative anonymity, sometimes after running afoul of White House officials. Both sides were deeply disgruntled. Agency heads privately complained that the White House was a 'fortress' that was unwilling to accept input and that micromanaged their departments."

Still to come: The Senate has passed a patent overhaul; the White House is appealing an anti-health care reform ruling; the Wisconsin battle is spurring recall campaigns; the House GOP's effort to strip the EPA of its power to regulate the climate is moving ahead; and a full crib of baby pandas.

Economy

State and local pensions are burdened by bad actors gaming the system, reports Karen Tumulty: "AFSCME, which is the largest public-employee union, says that its average member earns less than $45,000 a year and receives an annual pension of roughly $19,000. But many retirees from state and local government jobs do much better than that. When the advocacy group California Foundation for Fiscal Responsibility requested state retirement system records in 2009, it discovered that nearly 15,000 of the state's retired government employees were receiving pensions of more than $100,000 a year, with Malkenhorst topping the list."

The Senate passed a patent overhaul, reports Edward Wyatt: "The Senate easily passed a bill on Tuesday that would overhaul the nation’s patent system, giving the Patent and Trademark Office more flexibility to control its own financing and changing the system to one that rewards the first inventor to file a valid application. But the House is unlikely to take up a patent bill anytime soon, and people with an interest in the patent system say they expect its bill to be significantly different. That means that for the foreseeable future, patents will continue be awarded to the first to invent a new product, even if the inventor was not the first to file an application. The Senate voted 95 to 5 to approve the America Invents Act."

Even moderate Republicans could oppose a debt limit increase, reports Scott Wong: "When the requests were coming from President George W. Bush, moderate Republicans in the Senate such as Susan Collins and Dick Lugar had no problem voting to hike the federal debt ceiling year after year. Now, with a Democrat in the White House and full-blown deficit anxiety taking over Congress, these Republicans are avoiding taking a firm stand, realizing that unquestioned support for increasing the U.S. borrowing limit is politically toxic with voters -- not to mention many in the right wing of their party. Indiana’s Lugar, who almost certainly will face a tea party primary challenge in 2012, hasn’t made up his mind on the debt ceiling, saying, 'We’re just in the opening innings.' And Maine’s two GOP senators -- Olympia Snowe and Collins -- have spoken about the issue only in broad generalities."

The recovery could be sputtering, writes David Leonhardt: "All in all, the situation is uncomfortably reminiscent of last spring. Back then, companies were just starting to hire again, before a combination of events -- including Europe’s debt crisis and the fading of the stimulus program here -- spooked them and cut short the recovery. It’s easy to imagine how energy costs and government cuts could do the same this year. But no branch of the federal government seems to be taking these risks seriously enough. At the Federal Reserve, some top officials still argue that the economy is at risk of overheating, even though they have been wrong on this point for months and still don’t have much data on their side...The Obama administration, for its part, seems confident a true recovery is under way -- much as it was confident a year ago, to its detriment."

The computer revolution hasn't done much for economic growth, writes Annie Lowrey: "A quarter century ago, with new technologies starting to saturate American homes and businesses, economists looked around and expected to find computer-fueled growth everywhere. But signs of increased productivity or bolstered growth were few and far between. Sure, computers and the Web transformed thousands of businesses and hundreds of industries. But overall, things looked much the same. The GDP growth rate did not tick up significantly, nor did productivity. As economist Robert Solow put it in 1987: 'You can see the computer age everywhere but in the productivity statistics.'... Perhaps the Internet is just not as revolutionary as we think it is."

The Obama administration is appealing a Florida judge's anti-health reform ruling, reports Jennifer Haberkorn: "The Obama administration Tuesday appealed Judge Roger Vinson's ruling that the entire health reform law is unconstitutional. The quick action of the government prevents the judge’s order from taking effect and shutting down implementation of the law for now. The 11th Circuit Court of Appeals could hear oral arguments in the case in late summer or early fall. Twenty-six states and the National Federation of Independent Business are suing to block implementation of the law, arguing that it is unconstitutional. Vinson ruled the law unconstitutional in January. On Thursday, he stayed his ruling on the condition that the administration file its appeal within seven days, as it did Tuesday."

Health care reform is spurring those with flexible spending accounts to get prescriptions for over-the-counter medication:http://on.wsj.com/gvHQPP

A bill that's passed the House would undermine health reform, writes Ezra Klein: "If you’ve been paying attention to the debate over the Affordable Care Act, you’ve probably heard about the 1099 provision. Essentially, small businesses manage to avoid paying taxes on a lot of small transactions. The 1099 provision would’ve forced them to report those transactions, raising about $20 billion over 10 years. But it would’ve require a lot of paperwork...When the Senate repealed the provision, they paid for it by canceling other spending that Congress had authorized, but that hadn’t yet been put to a particular purpose. House Republicans took a different approach. They’re trying to sharply increase the amount of subsidies that families will have to pay back if their income increases during the course of a year."

Both sides are seeking state senate recalls in Wisconsin, report Douglas Belkin and Kris Maher: "In Wisconsin, recall efforts are gaining steam with the help of groups from outside the state. Eight Republican and six Democratic senators have been targeted for recall. Nationwide liberal groups Progressive Change Campaign Committee, based in Washington, and Democracy for America, based in Vermont, have raised more than $500,000 online in the past week. The groups are using the money to pay for television ads targeting Republican senators Randy Hopper in Green Bay, Dan Kapanke in La Crosse and Alberta Darling in Milwaukee. The senators appear to be vulnerable to recall because they won their districts by relatively narrow margins, and President Barack Obama carried all three districts, in two cases with 51% of the vote, the groups said."

The House will start targeting net neutrality rules today, reports Cecilia Kang: "A day before House lawmakers put controversial net neutrality rules under scrutiny, leading Republican lawmakers said the chairman of the Federal Communications Commission hasn’t convinced them that the reasons behind the rules were good enough. In a statement, House Energy and Commerce Committee chairman Fred Upton (R-Mich.) and Communications and Technology Subcommittee leaders Greg Walden (R-Ore.) and Lee Terry (R-Neb.) said an economic analysis provided by the FCC for its Internet access rules 'failed to provide a compelling justification for its power-grab.' The FCC implemented in December first-time Internet access rules that prevent cable and telecom operators from blocking or arbitrarily slowing traffic on their networks."

The House GOP's effort to strip the EPA's climate regulating authority is moving ahead, reports John Broder: "Science and politics rarely play nicely together, and a House hearing Tuesday on a bill to strip the Environmental Protection Agency of its power to regulate greenhouse gas emissions proved no exception. Democrats on the Energy and Commerce Committee’s subcommittee on energy and power demanded the hearing in the hope of slowing the inexorable progress of the bill, known as the Energy Tax Prevention Act of 2011, which enjoys the near-unanimous support of the Republican House majority. They appear to have failed. Despite some fireworks, the handful of members from both parties who attended the hearing left with the views they arrived with. The subcommittee is expected to approve the bill later this week."

A bipartisan group of lawmakers who pushed an energy compromise in 2008 is getting back together:http://bit.ly/iffCYk

Lawmakers in both parties are skeptical of opening the Strategic Petroleum Reserve, reports Tennille Tracy: "Lawmakers on both sides of the aisle Tuesday urged the president to steer clear of the Strategic Petroleum Reserve until its use was "absolutely necessary," countering earlier calls by some Democrats to open the supplies in advance of the summer driving season. The strategic reserve 'is our nation's insurance policy against serious disruptions in oil supply,' said Alaska Sen. Lisa Murkowsi, the ranking Republican on the Senate energy committee. 'If we empty our strategic reserves now, and then face an actual shortage, we will literally have nowhere to turn.' U.S. House Minority Whip Steny Hoyer (D., Md.) also came out against releasing oil from the nation's emergency stockpile to deal with rising gasoline prices."

Products should be required to disclose the energy required to make them, writes Amanda Little: "The problem is that there is no easy way to quantify how much total energy we consume. Fortunately, there’s a great model already in widespread use: the nutritional information that appears on the back of every food product. Why not create the same sort of system for energy? Americans use more oil than people in any other developed country, about twice as much per capita, on average, as Britons...And because we don’t see how much energy goes into the products and services we purchase, we’re shielded from knowing the full extent of our personal energy demands -- and unprepared when rising fuel prices increase the cost of everything else."

Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews and Michelle Williams.

A very important but disgusting article by Karen Tumulty. You want to see why people in the private sector are angry at pensioneers. Its not the janitor making $30k per year in a pension, its the handouts, political favors that result in 15000 people in California alone making $100k. Its the shady deals in Minnesota and New York that thankfully Governor Cuomo tried to stop or at least slow down.

And through it all AFSCME says don't look at these hundreds of thousands of individuals across the counry that absolutely abuse the system, keep defined defined benefit plans. Ya right.

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Another example of PPACA's unintended consequences is the inevitable increase in those who previously got over the counter medications now going to their doctors (sometimes unnecessary) and getting a prescription for those medicines so they're covered by their healthplan. Wait wasn't this supposed to "SAVE" money not incent people to get unnecessary care? So if my kid has a headache I'm going to waste $100 of my insurance company's money to go to the doctor so I get a prescription for Tylenol so it can be covered with FSA money?

Time to fix another part of PPACA Ezra even before the 1099 issue is resolved.

I think the "intended consequences" of ACA outweigh the fact you can't get reimbursed for tylenol any more.

So let's see: 32 million newly covered in one hand, no tylenol in the other hand. Ummm, I'll go with the 32 million newly insured.

And, no-pre-ex rejections or recissions in one hand, no tylenol in the other. Umm, again, I go with ACA and hope to build on it.

ACA will certainly have growing pains. Any objective person will realize that.

And the Dems may indeed join the Repubs to sabotage it, as Ezra wrote yesterday, but if we all actually demanded our elected reps to support and fix it, then it would be a good thing and work ahelluva lot better than the system we had before.

And while you're at it, why not you demand we end immunizations since a few kids die from it each year? Um, a wise person says maybe not.

Or let's get rid of the military since they end up killing a few innocents in every war? Um, a wise person says maybe not.

Nothing is perfect. So you do the best you can and try to make it better. Otherwise, you're just a saboteur.

you miss my point. I don't get Tylenol over the counter so it doesn't affect me one cent. If you read the article you'd see that people are (because the government said you can't get over the counter medicines covered by your FSA these people are now running to their doctor to get a prescription and costing the SYSTEM more money in the form of these office visits for unnecessary services so they can get a prescription so they're not paying taxes on their Tylenol. I would expect the government thought this was a revenue producer but in effect its turning into an increase in cost (admittedly probably a small one when looking at the whole scope of it).

Again I don't have an FSA so it doesn't affect me one dime but I do pay premiums so increases in utilization that aren't waranted i DO pay for. Hence my point.

Sure the 32 million people being covered far outweighs that and that's why i called for an adjustment in this and not the repeal of PPACA. No one in their right mind would suggest repeal based upon the FSA issue.

My other point is that its another example of the unintended consequences of this just as the 1099 was (although i'm not so sure that it was really unintended). What else is coming up next that needs to be fixed??

And I'm not a saboteur. I'm someone on a comments page simply stating that the law isn't perfect (which we all knew) and it needs to be adjusted (AS I SAID) if you're at all concerned about reining in excess utilization.

and more importantly here's a snippet from the article if you chose to read it.

"He believed the tax-free treatment could lower health costs and thought everyone should have access to a flexible-spending account. He told the group that he takes over-the-counter Prilosec, a heartburn medication, which meant he didn't need a more expensive prescription drug.

"I didn't want to see us set up perverse incentives for people to use more costly drugs than they needed," Mr. Pewen says.

So its not JUST about Tylenol vs covering 32 million people. Its about making the system sustainable. if people have perverse incentives to see their doctor to get Tylenol and diaper rash ointment don't you think similar people will also instead of buying cheaper over the counter medicines like Prilosec will go to their doctors and get Nexium at a cost to the system of $248 a month? But hey it only costs a copay so what do I care right??

If you understood the what drives the costs you'd care about these unintended consequences. If you wonder why your premiums go up every year (and no its not CEO salaries like you've been led to believe) then you'd care about these things.

"While Americans say it’s important to improve the government’s fiscal situation, among the few deficit-reducing moves they back are cutting foreign aid, pulling U.S. troops out of Afghanistan and Iraq, and repealing the Bush-era tax cuts for households earning more than $250,000 a year."

It appears that Bloomberg only polled Democrats. Very few Republicans would have answered in this manner. Sorry but this is one poll that I don't think is accurate.

"But signs of increased productivity or bolstered growth were few and far between. Sure, computers and the Web transformed thousands of businesses and hundreds of industries. But overall, things looked much the same. The GDP growth rate did not tick up significantly, nor did productivity. As economist Robert Solow put it in 1987: 'You can see the computer age everywhere but in the productivity statistics.'... Perhaps the Internet is just not as revolutionary as we think it is."

"At one point, some economists thought that an Internet-driven golden age might have finally arrived in the late 1990s. Between 1995 and 1999, productivity growth rates actually exceeded those during the boom from 1913 to 1972—perhaps meaning the Web and computing had finally brought about a "New Economy." But that high-growth period faded quickly."

Productivity growth was faster from 2000-2010 than 1995-1999.

"That is in part because the Internet and computers tend to push costs toward zero, and have the capacity to reduce the need for labor."

Isn't this what productivity growth is? If cars could be sold for free and required zero hours of labor to build, wouldn't that be a huge productivity gain, even if revenue to automakers and dealers tanked?

Democrats are more worried about Cowboy Poetry museum (Harry Reid)than solving problems. This is proof that Democrats are Not serious about the budget, deficit.
Its the epitome of Irresponsibility.
Harry Reid should be Forced to Retire.
On ObamaCare, I believe the judge in Fla.,
by forcing Democrats to appeal this week, actually expedites ObamaCare going straight to the Supreme Court quicker.

I'm trying to connect all the dots between WI negotiations (or not), health-care reform (show me a better plan and we will go with it. AKA put up or shut up) and the budget battle going on in Washington.

My thought is that the Liberals should make an honest offer to the Conservatives that they will allow a given cut in spending in return for a given revenue enhancement (tax increase, removing a tax cut, or removing a tax credit/subsidy, etc) dollar for dollar. The argument is that to really address deficit spending we must look at both sides of the balance sheet. To use the kitchen-table analogy, quite often a family faced with too much debt will not only try to reduce spending, cutting out non-essential spending, but also looking for ways to increase income, like getting a second job.

So, if the Conservatives go after some spending program, the Liberals go after some tax cut/credit/subsidy. Then there has to be compromise on both sides. There would also be a real unveiling of loyalties (on both sides). For example, would the Conservatives be willing to let go of the subsidies to Big Oil, or Pharma, in exchange for the cuts they want to make to make in the bill now before them in Congress? I don't know. Maybe they would. Maybe not. But it make for more transparency and it would make both sides negotiate. This is the missing piece in ALL of politics today. There is no negotiation. It is "My way or the highway" coming from both sides.

Now some news outlets have brought back and old 70s index. How many of you remember the Misery Index of the 70s? This can not be good for our President and the dems, this is a index from the Carter years.

"It cited a recent European Commission study showing that six to seven percent of economic growth in western countries -- about 800 billion euros ($1,100 billion) in the EU -- is already dependent on such navigation."

No need to read your article to make my earlier point, which is a higher level concern.

Namely, your "issues" may or may not be valid (I assume they are), but my point is why constantly harp on about small issues that will be fixed if we instead united to tell our reps to just fix these issues. It's one thing if you were talking fairly about the pros and cons in general and trying to get support to make sure issues are being addressed.

But in a time where support is sought for repeal, anyone who constantly gripes about growing pains and not the significant benefits of ACA is most probably in the came to repeal or neuter ACA.

"It cited a recent European Commission study showing that six to seven percent of economic growth in western countries -- about 800 billion euros ($1,100 billion) in the EU -- is already dependent on such navigation."

Thanks for the link.

This article seems a bit confused.

The phrase 6% to 7% of economic *growth* would refer to a portion of the increase in the size of the economy - in the U.S., 7% of economic growth in 2010 would amount to 0.2% of GDP. Of course, the article then applies that value to the whole economy, rather than to a given year's growth, hence the trillion euro figure used.

I think what the article is trying to convey is that 6% to 7% of the economy in Western countries is structured to be reliant upon GPS. That 6% or 7% could largely exist without GPS, but a sudden disruption given this reliance would be tough for this portion of the economy to deal with. That seems to be more reasonable.

How does merely having access to GPS increase annual production by $2 trillion in the US and EU combined? That just seems too big of an effect to be plausible.

Let's see. We're broke. Taxes are killing us. Unemployment is rampant. And Amanda Little (whoever she is) wants more tax money for yet another government program, this one to label products according to how much energy it takes to produce them. Never mind that the calculation would be extremely difficult to do; never mind that it's not a function of government; all that matters is that it's another way for government to intrude on our lives and spend our money. Is there no limit to the silly ideas people can dream up to grow our government?????

I'm in the "keep it and build on it" if you must put me in one section as I'm not for repeal but I'm also going to mention when it doesn't work and mistakes are made.

I'll give you an example. Think about the regular operation of a train. It works every day almost no issues but all of a sudden twice in a two week span there are two derailments that end up being caused by human error. Are you going to mention the human error in a way to fix it or are you going to complain that I didn't mention the last 4 years when there weren't any derailments? Human nature doesn't allot for telling someone good job because events occured as planned but when you think something's going to happen that's not planned then I'm sorry but i'm going to speak up about it. that doesn't make me in favor of repeal but of fixing something that's not working the way it should.

And there aren't just two camps. Its not that black and white. Something this important can't be.

And again its not inconsequential. Here's the kicker to the article:

In the Nielsen survey, 37% of flexible-spending account users said they would ask their doctor about prescription drugs that could replace their over-the-counter medicines.

This will increase utilization and cost from $0 to a much higher number than that which then drives your premium increases we all scream about.

All the while we were told that if we do reform we'd save $2500 per family. I'm fine with PPACA as I've said as its necessary. Just tell me the truth, that's all.

From an efficiency standpoint, it's probably still a better deal to buy a $4 box of generic acetaminophen and shake your fist at the 30 extra cents you'll be paying to Uncle Sam than taking the time to go to a doctor, pay a $25 copay for the visit, and then get a prescription that you'll pay another $5 copay on, all in order to make use of the FSA. (This is assuming you can't just call your physician and have them call in a prescription for free, but even then, there's a premium on your time.) OTC medications, even brand names, are still usually cheaper than the copay on most prescription medications people want, barring the really old ones.

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Also, anyone who believes "taxes are killing us" needs to examine their own lifestyle, and also realize how many services and safety mechanisms they take advantage of everyday. If taxes are killing you, you are probably living beyond your means, because taxes are pretty modest for 75%+ of the population. If the lifestyle you actually can afford doesn't appeal to you, I invite you to demand higher wages, as well as seriously consider why income disparity is so great in this nation, and whether that's really fair when you consider the value those people at the top are adding versus what they're taking home.

agreed that the people that do that are to put it bluntly STUPID. It doesn't change the fact that they're doing it. And its not just the copay that's the issue. If it was just the copay then who'd care. Its the cost of the drug, its the cost of the visit to your insurer who turns around and increases your rates and then you scream WHY (like you don't know why) and most importantly instead of bending the cost curve downward by encouraging use of OTC medications OR generics it is encouraging people to request brand name drugs when they're not necessary.

I'm so glad that the Democrats have put "entitlements" on the table for negotiation. Suggest we start these negotiations by insisting on a doubling of the Social Security payout, financed by a 99% inheritance tax on billionaires. Then the Democrats can get to work on restoring the social welfare system that we used to have in this country, and pay for that with much higher marginal income tax rates, and an annual wealth tax as well. And, of course, they should insist on providing government-funded health care for all.

Americans are entitled to a much better distribution of wealth than we're getting. It's high time to negotiate a better deal for ourselves. That's why we elected a Democratic President, and a Democratic Senate, after all.

"But many more agency chiefs conducted their business in relative anonymity, sometimes after running afoul of White House officials. Both sides were deeply disgruntled. Agency heads privately complained that the White House was a 'fortress' that was unwilling to accept input and that micromanaged their departments."

This is in many ways the difference between the GOP and the Dems in governing. (let's put aside for a second good and evil and just talk about style)

Democratic administrations usually bring in their high echelon people from the campaign trail, often composed of former politicians, and staffers.

The GOP often uses more people from a corporate or business background, even if they were at some time politicians themselves.

The difference is that Dem administrations are usually more centrally controlled and hands-on, because that is the campaigning background in which they feel most comfortable. GOP officials are more used to delegating responsibilites to a wider variety of people and then holding those people accountable.

You can see the turnaround in both the Clinton and Obama administration whereby early staffers who simply couldn't play on this level were replaced by those more used to their duties. Think Robert Gibbs as the classic example of this, a person totally devoted to the President, but having no experience or ability outside the world of cmapaign.

The appointment of Daley will help and may have already helped immensely as the resignation of Mack McClarty did for Clinton.

I'm beginning to think that Dave Leonhardt is replacing Krugman as the worst MYT columnist.

"Back then, companies were just starting to hire again, before a combination of events -- including Europe’s debt crisis and the fading of the stimulus program here -- spooked them and cut short the recovery"

This "Prague Spring" of 2010 never happened statistically speaking. The stimulus program itself as all acknowedge was much more heavily geared to the states and government workers than it was toward private industry.

"At the Federal Reserve, some top officials still argue that the economy is at risk of overheating, even though they have been wrong on this point for months and still don’t have much data on their side"

There is not one word in Fisher's column from the link that argues the economy as a whole is overheating! It is monetary policy and inflation risk that is being discussed. You can easily have that problem without economic supercharging. It is called stagflation and is just what many are worried about. NO ONE is saying the economy itself is overheating. The concept is thoroughly ridiculous at this time.

"Americans use more oil than people in any other developed country, about twice as much per capita, on average, as Britons..."

Can you think of a worse possible example than this?

"In total the NHS (UK)has a yearly budget of £80 billion and employess over 1 million people making the NHS one of the top 5 largest employers of the world"

In a country where only 35 million or so in the population is of working age, this means 3% of the British population works just for the government run health care system, not even the governmnet as whole!

A comparable ratio would require 6 million Americans to work for the Federal governmnet just in health care alone, notwithstanding that there are only 2 million current Federal employess overall.

I was merciful and didn't even go into the obvious argument that to compare oil usage between nations where one country is physically 35 times larger than the other is buffoonish at best.

There is NOTHING about the backward dying British ecnomy we would want to emuluate, so thank God we still use more oil!

"From an efficiency standpoint, it's probably still a better deal to buy a $4 box of generic acetaminophen and shake your fist at the 30 extra cents you'll be paying to Uncle Sam than taking the time to go to a doctor, pay a $25 copay for the visit, and then get a prescription that you'll pay another $5 copay on, all in order to make use of the FSA. (This is assuming you can't just call your physician and have them call in a prescription for free, but even then, there's a premium on your time.) OTC medications, even brand names, are still usually cheaper than the copay on most prescription medications people want, barring the really old ones."

I agree. I would add that if doctors are indeed writing prescriptions for higher-dosage prescription medications for patients that would be effectively treated with lower-dosage OTC medications, that issue strikes me as a larger problem with medical ethics, and not with the ACA per se.

Getting back to whether or not computers9tech add to the economy, well, even if GPS tech alone in fact accounted for only 6% of the annual growth, as opposed to the entire economy, that is significant and nullifies the idea that computers/tech was inconsequential.

I'm even willing to assume the article got it wrong even on the 6% of growth. But still, computers effect every part of the economy today, so I still disagree with the argument that computers are inconsequential to economic growth.

"But still, computers effect..." No, it's "computers affect.." You may call this a small error, but it's a sign of not having read very much. And reading, as well as high taxes, will help us "win the future." (TM)

"In a country where only 35 million or so in the population is of working age, this means 3% of the British population works just for the government run health care system, not even the governmnet as whole!

A comparable ratio would require 6 million Americans to work for the Federal governmnet just in health care alone, notwithstanding that there are only 2 million current Federal employess overall"

Currently over 15% of our GDP goes toward health care; that would imply something on the order of 20 million employees in our system. Moving to a system with a mere 6 million would save us trillions yearly.

As to the 'oil usage' Europe as a whole is comparable in size to the US, and still uses far less 'petrol' per capita; geographic size by itself is fairly meaningless. You could argue that population density had meaning, but you'd mostly be wrong.

As to "violating individual rights", one man's 'right' is another man's pragmatic and efficient solution to a complex economic challenge. Obviously the founders didn't consider taxation a violation of an inalienable right when they gave the federal government a 'blank check' when it came to taxation. Arguing against 'taxation without representation' does not imply that one opposes taxation posed by a democratically elected government, in fact, it implies the opposite.

No, it's "computers affect.." You may call this a small error, but it's a sign of not having read very much.

That's as assumption on you're part, and a wrong one.

You completely ignore the fact I type fast and dont want to waste precious time checking grammer/etc. In fact, I knew I had typed the wrong word after I did so, but I didn't feel like going back and correcting it.

This is a comment section for goodness sakes.

And yes, I know I should have typed "your" instead of "you're" according to my two copies of The Elements of Style by Strunk and White.

"I'm not about to violate individual rights in order to (probably) make some aggregate non-entity better off."

Justin, rights to property are completely derived from society.

Beyond that, though, you seem to have some interest in the status quo, which is a scheme of progressive taxation. Do you agree with this? Progressiveness is relative - a factor that can be tweaked - so to say that now is the way that things should be versus any proposed increase in taxation on the wealthy in order to assist in making sure other parts of the population don't starve, go without shelter, or have so little access to care that a toothache results in death seems pretty arbitrary.

I'm guessing you're reasonable enough to see that services are vital to society and that they need to be paid for. I imagine you're probably a proponent for a flat tax. At the same time, you're obviously wise enough to recognize how incentives work.

I don't see how, though, from the gist of your posts, your proposed viewpoints would result in societies more advanced or safe than the economic bottom half of the countries in the world. Banana republics are often in lovely parts of the world, but I wouldn't want to be one of their average citizens.

"Currently over 15% of our GDP goes toward health care; that would imply something on the order of 20 million employees in our system. Moving to a system with a mere 6 million would save us trillions yearly."

No, it woudn't because those employees would be on the Federal payroll, and not the private ones. They would be entitled to greater pension benefits paid out of the Federal budget as well as Social Security rather through private industry. They would also be incapable of being fired or laid off in an economic downturn, unlike in private industry. Finally, as few cost controls as there currently are in private health care, there are none whatsoever in a system like Medicare.

"Europe as a whole is comparable in size to the US, and still uses far less 'petrol' per capita; geographic size by itself is fairly meaningless. You could argue that population density had meaning, but you'd mostly be wrong"

Of course population density has meaning. That's like saying it's wrong for the US to use more oil per capita than Hong Kong. The arguemnt is sheer absurdity. Now if you want to talk abour electrical power generation, then you can more fairly argue across national lines. Oil however is first and foremost a transportation fuel worldwide, and there is simply no way to argue that nation size does not matter.

It also stands to reason that countries that are more heavily industrialized will use more oil, as will countries that have a large agricultural export economy relying on the use of petroleum based products. In these absurd comparisons, the petroleum based products used in agriculture are credited against the producing nations, even though the products are destined for compsumption in nations that are credited with having lower petrol usage. There is simply no basis for comparison of oil usage between nation states whatsoever.

You know this, because you're a very bright contributor. You're just dissembling on this one.

In a perfect world, at the top of the list for cutting the budget SHOULD be defense. Start out by asking the Pentagon what it DOESN'T WANT. Then cut.

The problem is that nobody has the courage to do this, because the strategy of the Military-Industrial complex has been the every-state strategy: Organize your program so that every state (& if possible every district) has some subcontractor. So nobody will vote against it because 1000 $lowers are blooming -- everywhere in every district. And the politicians will cry that "We CAN'T cut DEFENSE!!!! Not in TIMES like THESE!!!" Hard-liners will fight cuts because it "weakens our defense". Liberals will fight cuts because jobs will be lost. The perfect storm!

Sadly, we will continue to squander precious funds on programs precious only to the contractors who support the politicians who vote for them. And punish those who have the courage to question.

To clarify, I might summarize your argument as "petroleum usage (per capita) is a function of a country's economy (exports, imports, industrialization, GDP, etc.) and population distribution (lengthscales involved, density, etc.), which are completely incomparable between the USA and UK/Europe/Hong Kong etc.", which is entirely true.

However.

Those specific factors, the country's economy and population distribution, are extremely dependent on gas prices, which in the specific US/Europe comparison are differentiated by the tax rates the countries involved have applied. Had America, and not Europe, decided to heavily tax gas after the second world war, today Europe would be the more agriculturally based economy and America would have the denser urban areas.

Property is a natural right. Taking another person's property simply because you want it and think there is a better use for it is nothing more than theft. There is nothing magical which transforms the act because it is routed through a government agent.

How is there any difference between getting together with your neighbors and voting away someone's property in the ballot box, or doing the same in that person's driveway?

"Beyond that, though, you seem to have some interest in the status quo, which is a scheme of progressive taxation. Do you agree with this? ... I'm guessing you're reasonable enough to see that services are vital to society and that they need to be paid for. I imagine you're probably a proponent for a flat tax. At the same time, you're obviously wise enough to recognize how incentives work."

I oppose coercive taxation on principle.

The only reason for a government to exist is to protect the life, liberty and property of the citizens, and it doesn't follow that the entity tasked with protecting property rights should become (by far) the biggest violater of property rights in the process.

If people aren't voluntarily willing to pay for a good or service, then I don't see it as vital. Vital services will be recognized and contributed to on a voluntary basis.

"I don't see how, though, from the gist of your posts, your proposed viewpoints would result in societies more advanced or safe than the economic bottom half of the countries in the world. Banana republics are often in lovely parts of the world, but I wouldn't want to be one of their average citizens."

I don't see how an already prosperous country would collapse in on itself without coercive taxation. In any case, we should get right and wrong correct first, then worry whether or not the trains run on time.

"Property is a natural right. Taking another person's property simply because you want it and think there is a better use for it is nothing more than theft. There is nothing magical which transforms the act because it is routed through a government agent. "

There is no right to property without rule of law; outside the context of a social contract with rules governing dispositions of property, what is yours is only yours so long as you are able to keep it. On this matter, I really think Hobbes was more correct than Locke, who was wishfully thinking.

"How is there any difference between getting together with your neighbors and voting away someone's property in the ballot box, or doing the same in that person's driveway?"

Provided that that's the means established by the contract to govern property, then that's legitimate under the rules. It isn't theft if it's legal under the laws of a society.

"If people aren't voluntarily willing to pay for a good or service, then I don't see it as vital. Vital services will be recognized and contributed to on a voluntary basis."

This is where your idealism hits an enormous pragmatic road block. I invite you to read Mancur Olson's "Power and Prosperity" or "The Logic of Collective Action". It is rational for people to seek more for less, and to freeride when and as they are able to do so. Almost everyone behaves this way most of the time, and this affects all facets of life. It's also why taxation is required to provide for public goods that everyone uses but no one wants to pay to produce.

"I don't see how an already prosperous country would collapse in on itself without coercive taxation."

"and repealing the Bush-era tax cuts for households earning more than $250,000 a year."

I noticed that we're now calling it the "Bush-era" tax cuts, instead of just the "Bush Tax cuts.

But, to be honest, we should be calling them the Obama Tax cuts for the wealthy, since it was his administration, along with huge Democrat majorities in both the House and the Senate, which extended these tax cuts.

We did not run up our deficit through spending on Social Security and Medicare. In fact, using Social Security taxes for general government expenditures has been a long standing practice. We are not likely to make much progress in more government fiscal responsibility until we face up to the general American sense of entitlement to living beyond our means. That means rescinding the unaffordable Bush tax cuts. That means taxes on gasoline. That means tariffs on Chinese imports if that is the only way to get to balanced trade with China. Instead, both the Democrats and Republicans rushed to continue all of the Bush tax cuts. Now they are both talking about dipping into our emergency oil reserves to try to maintain low oil prices. Beating up on the elderly is just an excuse for Congress and those who elected them from both parties to avoid accepting the reality that the American middle class as a whole has to trim its consumption to get it in balance with what we produce.

"There is no right to property without rule of law; outside the context of a social contract with rules governing dispositions of property, what is yours is only yours so long as you are able to keep it."

So you claim that theft isn't actually wrong from a moral standpoint, it's just an annoyance worth stopping if you are able to. The guy who holds a gun to your head and takes your wallet isn't doing anything immoral, after all your wallet wasn't yours because you weren't able to keep it.

Do you really believe that?

"Provided that that's the means established by the contract to govern property, then that's legitimate under the rules. It isn't theft if it's legal under the laws of a society."

So Vorkuta and Auschwitz were okay, since they clearly weren't illegal in the USSR/Nazi Germany, right? Something can be legal and immoral, and it can be illegal and moral. The two are not the same.

I say you have an inalienable right to your wallet, and the victims of Vokuta and Auschwitz had an inalienable right to their lives and liberty - those rights continue to exist even if violated.

"It is rational for people to seek more for less, and to freeride when and as they are able to do so. It's also why taxation is required to provide for public goods that everyone uses but no one wants to pay to produce."

Free riding already exists. The top 10% of the population basically pays for all of the federal government, more or less. FICA is largely contributing to programs which promise future transfers, transfers which exceed contributions from the poor and middle class.

There are cures for free riding which work in many cases without bringing a gun into the equation.

People give away north of $300 billion annually despite several trillions taken away in taxes, both reducing the wherewithal to give, and the rationale to give (as the government is already providing charity).

Many wealthy people are inclined to charity, and have been so throughout our history.

Collective action causes its own problems, as taxes and deadweight loss, along with general government waste, cost the economy trillions each year (tax compliance alone is estimated to be several hundred billion). Economist Robert Murphy did a back of the envelope calculation a year ago that suggested GDP in 2009 would be 18% higher (basically the growth which occurred during the 2000s) with a far more limited government.

"How did it become prosperous, Justin?"

Capital accumulation and technological progress. Free people generally seek to better their own condition.

Two of the Republican nominated members, Warsh and Duke, don't even have bachelors degrees in economics, but to the Republicans a Nobel Prize winner in economics is not qualified, but hey education and competence are elitist and liberal.

arm 3: "It isn't theft if it's legal under the laws of A society." Are you kidding me? You have to be kidding. Just these last weeks we are hearing of massive wealth accumulated by various North African tyrants. They controlled the laws. So it was legally acquired. There have been all kinds of kleptocracies in the world, all kinds of laws we would clearly see as atrocities. You don't have to go back to the Nuremberg laws. What about the punishments of gays in Uganda, or in Iran?
Now let's all say: win the future.

(1) "So you claim that theft isn't actually wrong from a moral standpoint, it's just an annoyance worth stopping if you are able to. The guy who holds a gun to your head and takes your wallet isn't doing anything immoral, after all your wallet wasn't yours because you weren't able to keep it."

(2) "So Vorkuta and Auschwitz were okay, since they clearly weren't illegal in the USSR/Nazi Germany, right? Something can be legal and immoral, and it can be illegal and moral. The two are not the same."

(3) "Just these last weeks we are hearing of massive wealth accumulated by various North African tyrants. They controlled the laws. So it was legally acquired. There have been all kinds of kleptocracies in the world, all kinds of laws we would clearly see as atrocities. You don't have to go back to the Nuremberg laws. What about the punishments of gays in Uganda, or in Iran?"

Legitimate use of force is reserved solely by the government; our founders established that "inalienable rights" included life, liberty, and the pursuit of happiness; and the founders' core argument relative to taxes was that they are legitimate only when applied through a representative government.

It's unclear to me how scenario (1) doesn't involve the use of illegitimate force. (2), it's unclear to me what history you read that suggested none of life, liberty, or the pursuit of happiness were violated in Vorkuta and Auschwitz. It's unclear to me which of the North African kleptocracies in (3) involved proper representative governments that would have met the founders' taxation requirements. And LL&tPoH for the african gays too.

The whole "taxes are immoral" philosophy has the problem, beyond the complete lack of support from our founders, that it is utterly impractical.

It's called "Leviathan" for a reason. Outside of a social contract, though, there is no such thing as morality. Morality presupposes the existence of "good" and "bad," and those concepts only exist in a societal setting.

In this context, "life" is a natural right - no one can contend that you do not have a right to defend yourself. "Liberty" to a certain extent falls into the same boat. It's inherent to your being.

Property however you have to keep somewhere, and presumably you can't carry it all with you.

It's left to a society to determine how to make its "Leviathan" less crappy for its individuals. Of course laws aren't always fair or just, but usually it's better than the alternative. Usually in a representative democracy, people are interested in not voting to take each other's stuff, since they don't want that to happen to them in turn. The golden rule and all that.

So how has government screwed you as an individual over that's made you so mad, anyway?

Have you ever been to Western Europe? It's pretty nice. How about Costa Rica? Roads are *pretty* crappy there, and poor infrastructure generally makes it difficult to build, though it's beautiful. Lots of taxation and central planning in Europe, and yet these are among the most vibrant economies in the world. Of course there are lots and lots of other contributing factors, but this aspect plays a large role.

To put it another way, it's difficult to argue that your property belongs to you outside of the context of the government when almost all your wealth is denominated in U.S. bank notes. You would make a stronger case for your stance if you traded it all in for gold. You might have a hard time though buying groceries that way, never mind getting paid.

"Outside of a social contract, though, there is no such thing as morality. Morality presupposes the existence of "good" and "bad," and those concepts only exist in a societal setting."

At least this makes sense - if you reject morality as something that actually exists, then theft isn't wrong.

I disagree with the premise. Right and wrong exist, and on a personal level everyone acknowledges it. If someone came up to you and stole something from you, it would be wrong. It would be wrong if that person instead hired another person to do it on his behalf, and it would still be wrong if a few thousand other people in the community supported the theft. The societal context is irrelevant.

What if some radical conservative suggested that we just euthanize the poor rather than provide welfare - does morality still not really exist, or is that evil regardless of the societal setting?

"Usually in a representative democracy, people are interested in not voting to take each other's stuff, since they don't want that to happen to them in turn. The golden rule and all that."

But that's exactly what's going on. The government's budget is up above $3.5 trillion, and most people would rather tax the rich to pay for it than to pay themselves or to cut spending. They are voting to have the property of some taken and used for their preferred programs.

"So how has government screwed you as an individual over that's made you so mad, anyway?"

I don't really feel screwed or angry. I just feel that the government tramples on human rights and it should be reduced back to its basic role of defending our rights as human beings. No government will be perfect, but if its reason to exist is to protect rights, it shouldn't violate rights in order to finance itself.

There is some emotion though. I feel sick to my stomach when I consider that the tax money I'm forced to pay could have contributed to the deaths of innocents in one of our various unnecessary wars. Feelings like that aside, my opposition to big government is largely from dispassionate analysis.

"To put it another way, it's difficult to argue that your property belongs to you outside of the context of the government when almost all your wealth is denominated in U.S. bank notes. You would make a stronger case for your stance if you traded it all in for gold. You might have a hard time though buying groceries that way, never mind getting paid."

So let me get this straight. The government gets into the monetary business, enacts legal tender laws and places all sorts of burdens on using gold as money, takes a portion of my wealth by inflating away the value of the USD it basically forces me to use, and that gives it claim to my whole bank account? Even if we accept this, we must consider the original intervention of government into monetary affairs a form of theft itself.

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